Synchrony's deal for GPShopper puts mobile commerce at issuer's core

After its work with GPShopper produced favorable results the past two years, Synchrony Financial aims to dig deeper into mobile commerce by acquiring its partner.

The acquisition helps the private-label credit card provider enhance its merchants' digital payments and mobile commerce capabilities at a time when retailers are competing to deepen their mobile engagement with consumers.

The companies have already worked together to develop the Synchrony Plug-in, or SyPi, an app that allows retailers to create a digital card account. But it's not to be confused with creating a mobile wallet app for the retailer.

"A few years ago it was true that mobile was kind of a scary thing for retailers to consider, but this is 100% consumer driven," said Maya Mikhailov, co-founder and chief marketing officer of GPShopper.

"The power of SyPi is the flexibility on how the platform was designed," said Florin Arghirescu, senior vice president of customer relationships and innovation at Synchrony Financial.

Retailers can integrate fully compiled code with exposed local Application Programming Interfaces or a customizable Software Development Kit. In that way, SyPi has the ability to "communicate with the retailer application in a native app environment," Arghirescu added.

In that manner, Synchrony Financial is mobile wallet agnostic, as SyPi communicates with any wallet the retailer accepts or offers.

Synchrony was an early partner with Samsung Pay, in part because of a strategic investment with LoopPay (the technology behind what Samsung now calls Magnetic Secure Transmission), while also working with Apple Pay for a pilot with JCPenney; and with Android Pay.

The acquisition also comes at a time when retailers are finally setting aside any fears of advancing mobile and digital commerce with their customers.

"A few years ago it was true that mobile was kind of a scary thing for retailers to consider, but this is 100% consumer driven," said Maya Mikhailov, co-founder and chief marketing officer of GPShopper.

The design philosophy behind SyPi will carry on under Synchrony ownership. "It's about creating the touchpoints to get the consumer into these retailer programs," Mikhailov said.

Synchrony Financial and GPShopper make for "a very natural fit" in their efforts to bring digital capabilities to private-label cards, but the acquisition can also be seen as a testing ground for mobile commerce opportunities, said Jeff Crawford, senior consultant with First Annapolis Consulting LLC.

Retailers use the company's native mobile apps and SDKs to engage customers through multiple touch points, both digitally and in-store. In turn, Synchrony Financial provides GPShopper more scale with a wide range of retailers, merchants and service providers.

But being able to abruptly change course might be the most critical part of combining the company's assets, Crawford said.

"Consumers have not adopted this en masse yet, so it will be important for retailers to be able to pivot and try new things," Crawford said. "Not every merchant is going to want to do this the same way, some will be very different from a high-end retailer or a department store like Kohl's."

Both Synchrony and GPShopper realize they will have to be able to offer a customizable, flexible solution to retailers as the combined company improves its technology, Crawford added.

Retailers see more than 80% of the traffic on their websites is coming from mobile devices, Mikhailov said.

"Those numbers are fundamentally impossible to ignore," Mikhailov said. "It is just like where e-commerce was 20 years ago in that there are retailers who could have ignored e-commerce and felt it was too complicated."

Most importantly, retailers can advance e-commerce and in-store experiences by deploying mobile commerce properly, Mikhailov added. "It can really help them create dynamic and engaging in-store experiences because it's about using the device and the totality of what it can bring to your brand."

Stamford, Conn.-based Synchrony, a former unit of General Electric that completed its IPO in July of 2014 and fully separated from GE in 2015, is eyeing the acquisition as a way to keep its private-label card business moving forward after strong earnings performance in 2016. Financial terms of the deal were not disclosed.

"We are passionate every day about helping our retail partners be more successful, and I would say that all of them have an opportunity for a more well-toned mobile strategy," said Jay Neidermeyer, senior vice president of IT payments solutions and commercial for Synchrony Financial.

The transition for the companies has been smooth and employees continue to learn how to work together as efficiently as possible, Neidermeyer said. "But there have been some real accomplishments along the way already."